The latest games market research from IHS Markit shows that the console market amounted to $34.7 billion in 2016, down 2.5% on the 2015 total of $35.6 billion. The drop was a result of decreased sales volume for console hardware and a reduction in prices for consoles, including Sony’s PlayStation 4 and Microsoft’s Xbox One. World console hardware spending in 2016 fell to $10.5 billion from $12.8 billion in 2015.

Games content spending helped mitigate the decline in hardware spending, as both physical media and digital content combined reached sales value of $21.6 billion, up 5.6% on 2015. Sales value of platform subscriptions also increased significantly as Sony’s PS4 installed base grew, adding fresh subscribers to the market. Consumer spending on console platform subscriptions reached a record $2.8 billion, up 14% from 2015.

IHS Markit expects the overall market to rebound in 2017 and is forecasting 4.1% growth to $36.2 billion. Nintendo’s launch of the new Switch console and the growing digital business across consoles will drive this turnaround.

Sony’s Momentum Set to Continue

IHS Markit’s data reveals the overall dominance and momentum that Sony is experiencing in the console market with 57% share and $19.7 billion of spending on console hardware, games content and services. IHS Markit forecasts this trend to continue in 2017 with Sony well placed to break console market sales value of $20 billion in 2017 as the company drives through its strategy to aggressively build its digital console business.

Additionally, IHS Markit forecasts Nintendo’s fortunes to rebound in 2017 due to the launch of the Switch. Microsoft is also expected to rebound from the 2016 decline with continued growth in its digital content business and the launch of a high-powered version of the Xbox One platform, Project Scorpio to come by the end of 2017.

PlayStation 4 Dominates

IHS Markit confirmed that Sony’s dominance of the $35 billion console market continued in 2016, with its flagship console, PlayStation 4, responsible for almost double the sales value of hardware, content and services compared to its closest competitor Microsoft’s Xbox One. PlayStation 4 ended 2016 with an installed base of 53 million compared to Xbox One’s 27.6 million.

Sony’s PlayStation 4 console was responsible for $17.8 billion of sales value, or 51% share of the total console market with Microsoft’s Xbox One at $9.1 billion and 26% share. Nintendo’s 3DS platform (and its variants including the 2DS) was a distant third on the list with $2.6 billion of market value or 8% share of the market.